Tressel Surprises Team With Guest Speakers
July 25, 2008Trevor Crowe to Buff-a-lo
July 25, 2008As the Cavaliers Struggle To Re-Sign Restricted Free Agent Delonte West, We Look At A Changing Market That Is Bending Under The Pressure Of Impending Change
A lot of assumptions have been made regarding the Delonte West free agency. Reasonable assumptions they may be, but they’re assumptions none the less. I’ve yet to hear anyone voice any kind of doubt as to whether or not the Cavaliers would be able to sign Delonte. That is, until I read Bob Finnan’s latest article for the Morning Journal, in which he discusses the negotiations,
“The Cavs continue to negotiate a contract with West’s representatives. Sources say the two sides are not real close to an agreement at this time and a couple sign-and-trades have been discussed. The Cavs definitely want him back.
If things break down completely, West has the option of accepting the Cavs’ qualifying offer of $2.76 million. He would then become an unrestricted free agent after the 2008-09 season.
After details of Gibson’s contract have become available, West’s agents are expected to ask for more money since he’s the Cavs’ starting point guard.”
This is interesting, because I had been under the assumption that Delonte’s deal would be easier to get done than Gibson’s. I thought this for 2 main reasons. 1, I thought West had more motivation to sign quickly than Gibson did (meaning, I incorrectly assumed Gibson would try harder to negotiate with other teams than Delonte would), and 2, I felt like West’s role on the team and his skills are easier to define than Gibson’s. Again, this was obviously an incorrect assumption.
So here we are now, a player trying to get more teams interested in him to drive his price up to force the team that controls the ability to match any offer for him to pay him more money. This is where things start to get tricky, and this is where fractures in the perceived serenity of the NBA’s collective bargaining agreement are starting to show up.
This all ties in with what happened recently with Josh Childress, and believe it or not, I believe it’s possible this could have an impact on Cleveland directly. Now, to be clear, I am not suggesting Delonte will use Europe as a bargaining move or even consider it as a serious option. Delonte has not said anything about such a move and nobody has written anything about him. This isn’t so much about Delonte West as it is about the NBA in general.
For those who don’t know what happened, here it is in a nutshell. Josh Childress, an important part of the Atlanta Hawks, was a restricted free agent. After some negotiations with Atlanta, Childress was offered a rather lavish contract from a Greek professional team, Olympiacos. After heading to Athens to check out the team first hand, Childress accepted the 3 year contract.
How could this happen, you might ask, and how might this impact the Cavaliers? Both are good questions, and both have weighed heavily on my mind since this was first announced. The answer to the first question is easy. Sekou Smith of the Atlanta Journal Constitution lays out the differences between the 2 offers Childress had,
“— Olympiakos offered three years and $32.5 million, which after taxes paid by the club becomes a net of salary of about $6.7 million a year for Childress.
— The Hawks offered five years and $33 million, which after taxes paid by Childress becomes a net salary of about $3.4 million per year for Childress.
— In addition to the double-stuffed salary Olympiakos also pays for all of Childress’ living expenses, including luxury accommodations, a car and driver and maid service.
— Childress also has an annual opt-out clause in the contract that will allow him to weigh his NBA options, as a restricted free agent provided the Hawks tender a qualifying offer to him, every summer.
— There is no buyout clause in the contract, meaning Childress won’t have to negotiate a compensation package for Olympiakos if he were to return to the NBA before the end of the three year deal.”
When you look at it like that, it’s actually easy to see how this could happen. As we have previously pointed out, the global economy has made location less relevant than ever before. For the same reason we feel that LeBron can prosper in Cleveland just fine thanks to the smaller world created by technology and global marketplaces, so too can a player go to Europe, prosper, and not feel so disconnected from his home country.
We’re not the only ones who have noticed that this move not only makes sense, but could send waves of impending change throughout the NBA. The Hawks blog Impending Firestorm wrote an interesting bit of perspective on this, writing,
“The move for Childress probably paves the way for plenty more American players to do the same. A handful of other big names have also bolted to Europe, and with the Euro doing better than the dollar right now it doesn’t seem like such a bad option to be a superstar overseas. Childress would instantly become one of the highest paid players in Europe and would basically become one of the star players in his league. Instead of playing for a franchise that doesn’t seem to care about him in a league that sometimes doesn’t realize he exists, Childress will now become a star and will be paid like it.”
Henry Abbot of TrueHoop takes it even a step further. You need to set aside 15 minutes of your time and read his whole post on this topic, because it offers outstanding perspective on the whole thing. The part that particularly caught my eye, though, was when Henry wrote,
“The NBA’s collective bargaining agreement includes a ton of complicated clauses. Each serves a purpose, and you can make a case that, all told, it’s a good and fairly fair system. But regulation is always burdensome, and this league, famously run by lawyers, is knee-deep in legalese. In this instance, those rules created a really weird deal. According to Josh Childress, there were championship-contending NBA teams that were willing to pay him more than the Hawks would. A sign-and-trade couldn’t be worked out, so Childress was stuck. But that makes a situation where here’s an employee, a place that wanted to employ him, and an agreed upon price. In normal human life, that’s all you need to make a deal. You can only tinker with the free market so much before it starts depressing normal economic activity. This is one of those cases. A rule (essentially, the salary cap) designed solely to keep NBA teams competitive with each other now ends up helping a whole different league. Will the NBA change the salary cap in some profound way to address that? Babby, for his part, says that he would “never underestimate the capacity of the NBA to respond to market trends.””
Wow. Let that sink in for a minute. Could this set a trend so dramatic that it could even destroy the current Collective Bargaining Agreement that tries to protect smaller market teams? If Josh Childress is to be believed here, that’s what’s going on. If you look at the Championship-contending teams in the NBA, none of them have any real cap space left. What this means is that the most any of these teams could offer to Childress straight up would be the MLE ($5.8 million for 2008-09), a number the Hawks would obviously match if they really offered 5 years, $33 million, which is above the MLE anyway. So what we’re looking at is a situation where the system technically did its job and limited the offers other teams could make, thus protecting the Atlanta Hawks. But when players show a willingness to enter a completely different market to buck this system, it puts a lot of strain on the Salary Cap as it currently exists. So is this the beginning of a trend?
Micah Hart of Hawks BasketBlog isn’t so sure. Micah seems to think this is more of a move fitting to a guy with the demeanor of Josh Childress, as he writes,
“Not to go all Harvard, but today’s global economy is much different than it used to be. The euro is much stronger than the dollar, making it very easy for European teams to make competitive (or in this case, far superior) financial offers to NBA players. The top European teams are making more and more money every year, giving them large enough budgets to handle contracts of this size without even blinking. This was going to happen eventually, it just took the right kind of player to take the bait, and frankly, I think Childress is that guy.
Chills is not like most NBA players (afro aside). Every time I’ve chatted with him at the start of seasons past he’s raved about his trips abroad over the summer, including trips to China and Africa as part of the NBA’s Basketball Without Borders program. He realizes there is a much larger world out there, and he’s experienced a good bit of it. Right off the bat, the idea of playing in a foreign land was going to be much more palatable to him than most.
Josh is also a guy who, though dedicated to his craft, maybe doesn’t see basketball as the end-all be-all of his existence. He has continued to work towards a business degree over the past few summers and spoke often of wanting to be as successful off the court as he is on it. Therefore I can absolutely see where playing in the NBA, just because it’s “the NBA”, might not be enough of a reason on it’s own (the way it would be for many of his peers) to keep Childress stateside.
Maybe the money, coupled with the opportunity to travel and see the world, was enough to make him happy – regardless of what it meant to his NBA stature. I think that’s entirely possible, even if it’s hard for us to understand.
I don’t know if Chills’ move is a sign of things to come (in the same way Kevin Garnett ushered in the era of prep-to-pros players) or is more the random actions of a single player (think Ricky Williams retiring from the NFL). Only time will tell.”
So what does any of this have to do with Cleveland? Well, to put it as simply as possible, the current system is designed to create a competitive balance whereby a team like Cleveland can keep its superstars like LeBron James. But what happens is some of the more marginal role players, key as they might be to a team’s success, are stuck in the margins. A player like LeBron is going to get paid max dollars no matter where he plays, and there will be no shortage of offers for him when he becomes a free agent. But what happens to players like Daniel Gibson and Delonte West? The system as it is currently setup actually hurts these kind of players.
Some agents were a bit miffed by the deal Daniel Gibson signed with the Cavs, as Bob Finnan wrote,
“There was never any question whether Gibson would return to the Cavs. His agent, Lewis Tucker, was unable to find any teams willing to sign Gibson to an offer sheet. Other teams figured the Cavs would just match the offer. Some other agents scoffed at Gibson’s contract. Sure, $21 million is a lot of money. But some agents thought Gibson should have gotten a lot more, especially if he’s one of the Cavs’ “core” players.””
And that’s precisely the point. It’s all about creating a competitive marketplace for your client. The more offers you can get for your client, the higher his price will be. But under the current system, there are no offers available for mid-level players. There’s no point in teams making an offer when they know the original team will just match them.
To be clear, I am not saying this is necessarily bad. I do feel it is somewhat un-American to limit any marketplace, but I also understand the benefits of this limited marketplace approach. After all, its this limited marketplace approach that’s going to give the Cavaliers a leg up in the race to sign LeBron 2 years from now (strictly from a salary standpoint….obviously other factors will come into play). After all, the NBA seems to be becoming more and more of a small market league. They just moved a team from the 14th largest media market (Seattle/Tacoma) to the 45th largest market (Oklahoma City). The league’s current dynastic franchise resides in the 37th largest market (San Antonio). There are franchises in New Orleans (53rd), Memphis (47th), Salt Lake City (35th), and Milwaukee (34th).
I’m sure people in the mega markets of New York, Los Angeles, Chicago, Philadelphia, and Dallas will scoff at this notion, but obviously this system has served the league as a whole quite well in building a diverse portfolio of cities and markets where their product can exist in and in some cases thrive.
If players leaving for Europe becomes a trend and forces dramatic changes in the salary cap system, this will have a serious impact on both mid-market (Detroit, Phoenix, Minneapolis, Miami, Cleveland, Denver, Orlando, etc) and small market teams alike. A simple lifting of the salary cap altogether will create a system much like baseball where a small, select handful of teams are the only players in the free agent market every year. Smaller market teams will be forced to operate under a much different methodology, relying much more heavily on the draft and trading stars for “prospects”. Again, it can be debated whether this is a good thing for the NBA or a bad thing.
One question that can be asked is whether simply eliminating this idea of restricted free agentcy would suffice as a fix. The logic being that by eliminating the ability of any team to match offers, that more teams will get involved and make offers, and the price of the player will thus go up and the market will self correct accordingly. It sounds like a nice fix in theory, but the problem that will still remain is that most teams will only be able to offer the MLE due to the Salary Cap.
I would argue, then, that perhaps the best fix would be to remove restricted free agency and remove the hard limits on max annual increases. What this means is that in this proposed system, a team could sign a guy to the MLE for the first year, but then if said team has an extra $10 million in expiring contracts for the following year, the team could use that expiring money as the basis for the 2nd year increase. No team would be able to give a player a raise that would put the team above a projected salary cap for future years, though. What this would do is create a system whereby teams could get creative and make competitive offers without fear of having them simply matched right away. It would increase the number of offers being made, but by keeping the salary cap and the Qualifying Veteran Free Agent exemptions (Bird Rights) it would still allow the smaller market teams the ability to offer the maximum amount of money to their own superstar free agents.
Without a flux of players leaving the NBA to accept offers from European teams, none of this will matter. The system will likely stay in place, mostly as it currently is setup, and life will go on. We’ve already seen the likes of Juan Carlos Navarro, Carlos Delfino, Primoz Brizac, andBostjan Nachbar leave the NBA to play overseas, though, and now the most well known player yet in Josh Childress has fled the NBA. If this continues, the NBA will need to make changes to remain the most appealing and the most luxurious league in the world, and it’s entirely possible these changes will not be friendly to teams like Cleveland. It will definitely be interesting to watch future negotiations with our mid-market goggles on and observe what trends may be pushing the NBA into a different direction regarding the Salary Cap and the Collective Bargaining Agreement and monitoring what affects these changes will have on Cleveland. Stay tuned.
27 Comments
The NBA absolutely has to respond to what Josh Childress did. I wonder why Anderson Varejao never considered playing overseas, i bet Fegan just never thought of it. But now that it has happened to a quality player like Childress, the NBA, as a business, has to respond by changing the way they operate. I think by eliminating restricted free agency as a whole, that would offer more freedom to younger players to play where they want to play. Sure, most teams could only offer the MLE, but lets say we have Player A who previously played for team X and is offered a full MLE from Team Y. Since team X does not have restricted free agency to fall back on, if they want Player A they need to up their offer. Also, if a player like Josh Smith weren’t restricted, he could sign a one year deal for the MLE for any team in the NBA which would be ideal for him because the last place he wants to play in is Atlanta, but because he is restricted, that is where he will have to play. I don’t know if all that makes sense, but lifting restricted free agency offers more freedom to the players to play where they want to play. They shouldn’t be forced to play for whomever drafted them because other teams don’t have cap space to sign them, that system doesn’t hold teams accountable
I think what we are a long ways away from but might be kind of neat is a transfer system like in soccer. Every country has different leagues and such but they all adhere to one system of acquiring players. Granted, the Spanish Premiera, the English Premiership, and La Liga are all relatively competitive with one another, while the NBA is supreme in basketball. But still, maybe someday it becomes an international type thing. that might be neat
Great stuff, sir. Also a solid proposal. I’m not sure whether or not this will be a watershed event, but it definitely has the potential to be one. It will be very interesting to see what happens over the next year or so. I have a feeling that the league is more concerned with the prep prospects heading overseas, so I think we’ll have to get in line. But with that said, c’mon Delonte!
“Now, to be clear, I am not suggesting Delonte will use Europe as a bargaining move or even consider it as a serious option. Delonte has not said anything about such a move and nobody has written anything about him.”
Until now, that is. Could Delonte be headed to Russia?:
“the overseas revolution of outbidding NBA teams for restricted free agents advances with Dynamo Moscow discussing a two-year, $10 million offer with Delonte West, a source close to West said on Thursday.”
http://sports.yahoo.com/nba/news?slug=aw-west072408&prov=yhoo&type=lgns
(my apologies if there are any problems with the link, but it’s on Yahoo Sports)
Basketball, while popular in Europe as a second sport, is still on the level of soccer here in the US. I’m not worried at all that low to mid-level players will be lured to Europe. The European teams have money, but they can’t court an entire team of overpaid athletes, strong euro or not. The fan base is expanding, but make no mistake, Football rules Europe. Europeans have a limited entertainment budget, their taxes are brutal, and the sport of choice is not basketball. Just my .01 euro.
The Cavaliers better just pony up and keep West in town. Not saying Delonte deserves $7 million/year or anything like that, but I’d have no problem with the Cavs giving him something in the range of the MLE. If it’s between $5/yr from a Russian team or $5 million/yr from the Cavaliers, I’d have to think Delonte would take the Cavs offer.
Anyway, thanks for the heads up Wes. Definitely troubling news.
Also, why is Yahoo reporting this and none of the Cleveland papers have anything about West considering Russia whatsoever? This makes me think the Plain Dealer really is waiting for Windhorst to get healthy so they can offer him the beat. This is just ridiculous that we can’t get any local coverage of the Cavaliers at all.
DCBucks brings up a good point. Part of this is related to the current strength of the Euro vs. the $. As global markets change that may or may not become more or less of an issue. I also think hes right in stating the futbol is by far the number one attraction in Europe, but I think you should consider the possibility of multiple sports existing at high levels (we have 3 in the states).
Also a point to consider is the rise in quality of international play. If you look at the original dream team for USA and the way they took a gold medal with their eyes closed compared to the way things have been lately, I feel that the overall quality of play will make it more enticing for young prospects to head to Europe as well.
Why stay stateside just to ride the bench for 2 years before getting a legit shot when you could play in Europe for more money with more playing time against quality competition thats going to improve your game? Sure lottery pick caliber players are going to get their chances early but most players in the draft are going to have to put some time in the league before they’re given serious PT. It may be very enticing for these guys that are used to being the kings of their high school/colleges to go over to Europe for the instant fame and prestige instead of playing second fiddle over here in the NBA.
Certainly the NBA will find a way to deal with this, but I don’t think lifting the salary cap is the right move at all. This would destroy small market teams (and probably most mid market). I hate the current state of baseball where small market pro teams are essentially talent breeders for the big market teams. Also given the smaller size of NBA rosters compared to MLB rosters the discrepancy between small and large market teams would be worse.
Awesome read, but maybe this should have been 2 articles, it seems Delonte got lost in all the discussion. Since the Cavs haven’t acquired another point guard his claim to the starting spot is pretty solid, I guess it depends on how much more than Gibson hes asking for, but Gibson signed for pretty cheap so hopefully Delonte doesn’t want too much more. We could also try to sign him to something short term and look to use him in trade negotiations during the middle of the season.
Hoy
Wes, West isn’t being offered twice as much to go overseas like childress did.
The thought of West leaving and us not having a PG kind of makes me sick though.
Dynamo Moscow is the team that picked up Nachbar as well right? Those Russians are looking to step up their game it seems.
Now Sasha Vujacic is considering leaving too: http://sports.yahoo.com/nba/blog/ball_dont_lie/post/Sasha-Vujacic-off-to-Europe-?urn=nba,95974
Lots of good comments, you guys all make fascinating points. I’m loving this feedback. This is a great discussion, and I think it’s a lot more serious than I initially realized. But here’s my main question about this: What SHOULD the NBA do about this? I have strong feelings about what I think they WILL do (or won’t do, for that matter), but I’d love to hear what ideas you guys have that would make this a better system.
I rather like the point Ricky made about teams offering the MLE forcing the initial team to increase their offer. It’s a fair point that I didn’t think about.
That’s correct Hoy.
This was a good read. Is Cleveland’s offer to West, less or more than what they signed Gibson for?
Well, due to Cleveland’s best beat writer (Brian Windhorst) being hospitalized, and the Cleveland Plain Dealer firing their Cavs beat writer, we don’t really have anyone covering the Cavs, so that kind of information is hard to come by. I’ve heard as much as 5 years, $30 million and as little as 2 years, $10 million. Either way, those are both pretty greater per year amounts than Gibson got. I think it sounds like West’s agent is just trying to drive a hard bargain for Delonte’s services. Which, you know, is expected, but I just don’t see why Delonte would take this 2 year deal from Russia if the same offer is being made by Cleveland.
Rock,
2 years $10 mill in Russia is $5mill/year
5 years $30 mill in USA is $3-3.5mill/year
I would argue that playing with one of the greatest players of all time and winning a championship in the premier league is enough to stay in your home country. But who knows how NBA players think.
but you still have to take into account in Russia: no taxes, no car payment, no mortgage; in the US: car payment, taxes, mortgage.
Just out of curiosity Adam, where do those numbers come from?
And Joe, do you know for a fact that Dynamo offered West all those ammenities? The article doesn’t specifically say that they did. I suppose it’s a fair assumption, but I have not read that the Dynamo offered Nachbar those ammenities, either, so I’m not 100% positive that’s the case, and so I couldn’t really speculate on that side of the equation.
How about taking into account the fact that he’s been on about four teams in three years and taking an offer from a team that actually WANTS you to run their backcourt?
yeah that too scott.
like joe said, no taxes for the athlete’s in Europe, so he’s getting the full amount of the Russian contract.
In the U.S. he’s paying close to 50% in taxes in his contract. I just made up the $6 mill for 5 years, but it’s close to what I’ve seen mentioned, and if he’s going to demand more than that you would have to start asking how important he is to keep.
No doubt he’s important, but what chunk of the future do you risk just to make him happy?
So let me get this straight….
Athletes don’t have to pay taxes abroad.
They get free room and board.
They get free transportation.
How is this possible?
If true, this sounds like a real problem for the NBA. How can they compete with that offer?
It seems like there are a lot of players right now saying they are thinking about leaving to play in Europe, Carl Landry and Andris Biedrins, but for American players there should still be that desire to play and live in America in the NBA, the best league in the world, that is worth more than money. Some players might not like it in Europe either. Landon Donovan, one of Americas best soccer players, left a lucrative contract in Europe because he did not like being so far away from home. Surely some NBA players are considering that aspect
“If true, this sounds like a real problem for the NBA. How can they compete with that offer?”
It also sounds like USC…
I dunno Ricky. I can see the attraction to play overseas in places like Greece. If you’re young, single and wealthy, I’m sure that would be an experience of a lifetime.
What I don’t understand is why these restricted free agents don’t sign one-year tenders anymore. I mean, it’s just one season, and then you’re unrestricted, and you can go to whoever you want to go to. If Varejao wasn’t such an idiot last summer, he’d be unrestricted by now, and maybe a team like Golden State, who lost in the Elton Brand sweepstakes and now might lose Biedrins, would make a huge offer for him.
Trying to bypass this current system and being too cute has never worked for ANYBODY. If West is going to make less in Europe than he would in Cleveland, then he’d be a fool to take that offer. Which is why I think that this is all a bluff. The Childress BS is definitely making a lot of agents play the BS game. Call this bluff, Ferry.
Well, I think what’s interesting in Childress’s case, and why he didn’t just take a one year tender is that he stands to make a lot more money this way. Plus, it’s still a glorified one year deal if he wants it to be, with all the opt out clauses. Yes, he’ll still be restricted as long as the Hawks keep making a qualifying offer to him, but still, I can see why this move was appealing to a guy like Childress.
I think West’s situation is substantially different. I do think West’s all around game would make him a VERY good EuroLeague player, but he’s going to make the most money in the long run by playing in the NBA for Cleveland.
I agree with Amar, the closest a player can get to beating the system is signing the qualifying offer, but players are too greedy to do it. But still, we are seeing today that only a few players are truly cashing in on free agency. There are so few teams with cap space in a given offseason, any player who wants more than the MLE is likely going to be disappointed. Anderson might figure this out after this season
… Ron Burgundy had never heard that song …
I can’t imagine West wanting to head to play in Moscow, especially if the Cavs are willing to put him in the Wine and Gold for 3+ years. That being said, you never know –
vodkamoney talks.ok, The PD is finally mentioning the D.West rumors/news.
It’s amazing at the lack of Cav’s beat that exists in this cities major media print outlet! And get this; the story is by: PD’s own Jodie Valade?! Who?
Get healthy soon Windhurst! The PD needs your services, bad!